Prospect versus Utility

Prospect versus Utility

We show how to calibrate a prospect model of decision making under risk for an individual. The prospect model is empirically compared to a utility model on two criteria, verification of the postulates of each model, and predictive accuracy. The empirical comparison is performed via three experiments...

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Bibliographische Detailangaben
Veröffentlicht in:Management Science. - Institute for Operations Research and the Management Sciences, 1954. - 35(1989), 1, Seite 22-41
1. Verfasser: Currim, Imran S. (VerfasserIn)
Weitere Verfasser: Sarin, Rakesh K.
Format: Online-Aufsatz
Sprache:English
Veröffentlicht: 1989
Zugriff auf das übergeordnete Werk:Management Science
Schlagworte:Marketing Buyer Behavior Utility/Preference Theory Value Theory Law Applied sciences Economics Behavioral sciences Mathematics
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520 |a We show how to calibrate a prospect model of decision making under risk for an individual. The prospect model is empirically compared to a utility model on two criteria, verification of the postulates of each model, and predictive accuracy. The empirical comparison is performed via three experiments. In Experiment 1, predictive accuracy of the models is compared in nonparadoxical situations, those which favor neither model. In contrast the predictions in Experiment 2 are for paradoxical choices, those which favor the prospect model. In Experiment 1, the prospect model is compared to a model comprising a utility function which permits separate risk attitudes for gain and losses, and hence is more flexible than a utility model as traditionally assessed. In contrast the utility model in Experiment 3 is assessed as is traditionally done assuming constant risk attitude across gains and losses. Several calibration procedures are contrasted across experiments. Our results show a high degree of consistency with the postulates of both models. On predictive accuracy the prospect model outperforms the utility model for paradoxical choices. However, for nonparadoxical situations there is little difference in the predictive ability of both models. 
540 |a Copyright 1989 The Institute of Management Sciences 
650 4 |a Marketing 
650 4 |a Buyer Behavior 
650 4 |a Utility/Preference Theory 
650 4 |a Value Theory 
650 4 |a Law  |x Civil law  |x Property law  |x Intellectual property law  |x Industrial property  |x Utility models 
650 4 |a Applied sciences  |x Research methods  |x Modeling 
650 4 |a Applied sciences  |x Research methods  |x Modeling  |x Predictive modeling 
650 4 |a Economics  |x Microeconomics  |x Economic utility  |x Utility functions 
650 4 |a Economics  |x Economic research  |x Economic analysis  |x Economic value  |x Valuation  |x Tax assessment  |x Assessed values 
650 4 |a Economics  |x Microeconomics  |x Economic utility  |x Expected utility 
650 4 |a Behavioral sciences  |x Behavioral economics  |x Prospect theory 
650 4 |a Mathematics  |x Applied mathematics  |x Statistics  |x P values 
650 4 |a Mathematics  |x Applied mathematics  |x Statistics  |x Applied statistics  |x Inferential statistics  |x Expected values 
650 4 |a Mathematics  |x Pure mathematics  |x Probability theory  |x Randomness 
655 4 |a research-article 
700 1 |a Sarin, Rakesh K.  |e verfasserin  |4 aut 
773 0 8 |i Enthalten in  |t Management Science  |d Institute for Operations Research and the Management Sciences, 1954  |g 35(1989), 1, Seite 22-41  |w (DE-627)320623602  |w (DE-600)2023019-9  |x 15265501  |7 nnns 
773 1 8 |g volume:35  |g year:1989  |g number:1  |g pages:22-41 
856 4 0 |u https://www.jstor.org/stable/2631962  |3 Volltext 
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